In an election year, voters are bombarded with high-blown rhetoric and plenty of statistics. And the numbers are often as contradictory as the prose. The challenger wants us to believe things are awful, while the incumbent needs us to believe things are rosy, or at least getting better.
So let's step back from the world of stump speeches and debates
and ask the old Ed Koch question: How are we doing? When it comes
to the economy, the objective answer is: Very well.
On Oct. 1, the federal government's Bureau of Labor Statistics
(BLS) released its final pre-election jobs report. According to
that tally, our economy added 96,000 jobs in September, and our
unemployment rate held steady. Those numbers disappointed some
analysts, who'd expected even more jobs.
In fact, though, the job news is actually even better than
advertised. The Labor Department also admitted it has
undercounted jobs since last spring. Early next year, the
department will revise its figures to include an additional 236,000
jobs added since March.
Even that figure may be too low. As Heritage Foundation economist
Tim Kane reported in August, the BLS
admits that its employment count has problems. It mistakenly counts
workers twice when they change jobs, for example, but doesn't count
them at all if they move from a payroll position working for a
company to a consulting job working for themselves, or starting a
small business.
Fortunately, the government presents an alternative: The Census
Bureau's household survey, which actually asks people whether or
not they're working. This survey tallies people who work at home,
those who are independent contractors, and those who work for
themselves, while the payroll survey ignores all these
groups.
According to the household survey, the American economy has added
2.2 million jobs in the last year. All told, that means we've
created 1.6 million net new jobs since January 2001. We've pulled
out of a shallow recession, and today more Americans than ever are
working.
With that in mind, there's another number that's worth
considering: The unemployment rate. Economists say the economy
nears "full employment" when that rate drops below 5.5 percent.
Today, it's at 5.4 percent -- lower than it was in the late
'90s.
Unemployment has dropped in each region of the country this year,
and in 45 states. At the same time, overall employment has
increased in 47 states and compensation is rising. The Labor
Department says real earnings have increased since March
2001.
And let's compare ourselves with our competitors overseas.
Last month, Germany's unemployment rate climbed to 10.7 percent --
double our rate. And the German economy is actually losing jobs,
even as we're adding them.
How about France? The government there legislated a 35-hour work
week in an attempt to boost employment. It didn't work -- the
French are struggling along at 9.9 percent unemployment.
And right next door, consider Canada. Canadians enjoy a free-trade
agreement with the United States and they pay virtually nothing for
national defense (we cover that for them). Still, they lag far
behind us, with an unemployment rate of 7.1 percent.
Much of this good news can be credited to tax cuts. Over three
years, Congress and the president slashed taxes on married couples,
parents and low-income workers. Now, lawmakers should make all
those cuts permanent and simplify the tax code, so all
Americans will continue to have more money to save and invest.
By any measure, the American economy is booming. Business
confidence is high, and worker productivity is soaring to record
highs. Things are so good that a normally reserved observer -- Alan
Greenspan -- recently called our economy "resilient." That's high
praise from the Federal Reserve chairman.
The next president will face many challenges, but getting the
economy restarted isn't one of them. If he simply follows sensible
policies, there's no reason our economic engine won't keep humming
for years to come.
Ed Feulner is president of The Heritage Foundation, a Washington-based public policy research institute.
